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For Taiwan, subsidized retirement accounts a heavy burden

For Taiwan, subsidized retirement accounts a heavy burden

Taipei, Oct. 19 (CNA) Taiwan's government has to spend NT$80 billion (US$2.47 billion) a year to subsidize preferential interest rates paid on the retirement accounts of some public employees, and reforms are needed, an official said Monday. Ministry of Civil Service chief Chang Che-shen (???) said the 18 percent rate paid on parts of special savings accounts of retired civil servants, military personnel and public school teachers dwarfs the standard interest rate of about 1 percent most people earn. The difference in interest rates is paid for by the government. "No matter who takes power, they will have to face the issue of pension reform," Chang said on the sidelines of a legislative hearing, referring to Taiwan's presidential and legislative elections set for Jan. 16, 2016. He said pension reform is the consensus of society and the consensus of the governing Kuomintang and the opposition Democratic Progressive Party. As of the end of 2013, 440,000 retirees had total savings of NT$458 billion that benefited from the 18 percent preferential interest rate, costing the government NT$81.56 billion in subsidies, or around NT$3,500 per capita. The system is bound to cost the government a substantial amount in the near and medium future, as people who were public employees before 1995 are all eligible to receive the benefit. A new pension system launched in 1995 canceled the benefit for civil servants, military personnel and public school teachers hired in 1995 or after. An estimated 420,000 retired public employees enjoy the benefit today, and around 400,000 public employees who still work are also eligible for the preferential interest rate benefits once they retire. (By Sophia Yeh and Lilian Wu)


Updated : 2021-09-18 19:51 GMT+08:00